Factory jobs pay steady wages and could offer higher incomes than low-productivity agriculture and self-employment. For some, the question is not whether industrial labor improves well-being but how much. Others are more pessimistic. Classical economists from Smith to Marx viewed industrial labor as dull and deadening. Marx was especially concerned that it would crowd out the worker’s ability to seek better employment and “noble” self-labor. This emphasis on self-employment is shared by most states and aid agencies, and poverty alleviation programs emphasize micro-enterprise growth and smallholder farm productivity rather than industrial expansion. Factories generate growth, goes this view, but are not “pro-poor”. We test this view with an unusual experiment, one that randomly assigns applicants to industrial jobs to either the job, a self-employment program (of skills training and a cash grant), or neither. We are working with several factories and commercial farms in Ethiopia who agreed to randomize jobs among eligible applicants. This paper reports preliminary results from the first two hiring cohorts at a single firm, a water bottling plant near the capital. This initial pilot group is small—fewer than 100 assigned to either the factory job or the control group—and so the results are not statistically significant. The results are also short-term, looking at well-being just one year after the experiment. Full results on all firms and on the self-employment intervention will be available in 2013. The preliminary results, however, are most consistent with the optimists view. We see substantial reductions in poverty and income risk, and increases in health and subjective well-being. At a minimum, we read the results as no evidence that factory jobs systematically worsen their conditions of life.
Blattman, C.; Dercon, S. More Sweatshops for Africa? Pilot Results from an Experimental Study of Industrial Labor in Ethiopia (IGC Working Paper). International Growth Centre (IGC), London, UK (2012) 32 pp.